Blackmores records big profit for third quarter

Australia’s major dietary supplement manufacturer Blackmores has reported a profit of $31 million for the nine months to 31 March 2015, an increase of 76 per cent compared to the previous corresponding period.

Group sales for the period were $326 million, an increase of 28 per cent on the previous corresponding period. The results continue a trend that saw Blackmores report a 22 per cent increase in sales in the first half of the financial year. The Company said it expects to record a record profit for the full financial year.

“We are extremely pleased that the momentum in our business has continued,” said Christine Holgate, Blackmores Chief Executive Officer. “This was driven by strong performances across the group,” she said.

Ms Holgate said the third quarter results showed a continuation of the sales momentum that Blackmores had experienced across the Group, with a 42 per cent increase in quarterly sales and a 125 per cent increase in profit compared to the third quarter last year.

“In May, we celebrated the 30th year anniversary of Blackmores as an ASX-listed public company and we are delighted to commemorate this milestone with good financial results,” Ms Holgate said.

Strong pharmacy sales

Blackmores said its year-to-date sales growth, at 35 per cent, was boosted by strong pharmacy sales and the benefit of a growing demand for Blackmores products from Chinese consumers. The Company said its team was “further strengthened” by the appointment of Paul Di Vito as Chief Marketing Officer.

New BioCeuticals products support growth

Blackmores said its BioCeuticals business continued to deliver innovative new products across both the BioCeuticals and IsoWhey brands, which supported sales growth of 23 per cent in the third quarter compared to the previous corresponding period.

The Company said recent BioCeuticals Research Symposium attracted more than 300 health care professionals for a three day conference and masterclass series. Blackmores said the symposium received position feedback.

Sales growth in Asia

Blackmores reported sales in Asia were up 43 per cent in the third quarter compared to the same period last year, driven by strong performances in Malaysia, Singapore, China, Hong Kong and Korea. The Company said Thailand continued to face some market challenges.

“We have worked hard to significantly increase our inventory to minimise the impact on consumers when product lines are out of stock,” Ms Holgate said. “We encourage consumers who have been inconvenienced by certain products being unavailable to contact Blackmores Customer Service for assistance,” she said.

Blackmores also announced a partnership with Chinese tennis legend Li Na. The ambassadorship was announced in April 2015 in Shanghai.

“We are delighted to have partnered with influential Chinese tennis legend Li Na who will work with Blackmores on health and nutritional initiatives,” Ms Holgate said.

Increasing production volumes

Blackmores said it was adapting to the increased sales rate with a record 2.2 million units produced at its manufacturing facility, ‘Blackmores Campus’, in March 2015, and 2.75 million units picked and shipped in the same month.

The Company said these high volumes supported improved recoveries of fixed costs and continued to benefit its cost of goods, which was reflected in its improved earnings before interest and tax (EBIT) at $47 million for the nine months to 31 March 2015, up 67 per cent compared to the previous corresponding period.

“This strong performance continues to support an improving cash and debt position, with interest charges down 38 per cent in the third quarter,” Ms Holgate said.

Outlook

Ms Holgate said Blackmores had “strong momentum” in the business, driven by benefits from programs it has been establishing and investing in over recent years including “a vibrant presence in Asia, a respected practitioner brand and our heartland consumer business in Australia”.

“Our recent demand has been supported by operational and quality programs at the Blackmores Campus, which are adapting to the high volumes we are experiencing and we will continue to invest in our facilities to meet growing consumer demand,” Ms Holgate said.

“This success confirms the Board’s confidence in our business strategy and shareholders can expect the current year-to-date growth to continue and deliver a record full year profit for the Blackmores Group,” Ms Holgate said.